Nobody Knows What Will Drive Mobile Operator Revenue in 10 Years

Posted June 11, 2017

In Business Model, Internet Access, Mobile, Uncategorized

It might seem odd to hear Verizon CEO Lowell McAdam say “I can’t tell you 10 years from now what at top line revenue is going to look like for Verizon,” that is a practical observation about what his firm has encountered in the past, and what it can expect for the indefinite future. You might assume such statements are hyperbole, or simply figures of speech. They tend not to be.

In fact, Verizon and other mobile operators have literally had to shift revenue models at least every decade.

Early on, the mobile operator business model is quite simple: add more subscribers. In other words, what drives revenue growth is getting additional accounts.

At some point, that changes. Once nearly every potential customer has a subscription, growth has to be driven by additional products. Text messaging provides the best example. Mobile internet access provides another example. It is virtually certain that other successive waves of products will arise to drive further growth, as all the legacy services dwindle.

In other words, it is not a vague analogy, but a rather historically correct and quantifiable description of how Verizon’s revenue actually has changed over the last couple of decades.

One rule of thumb I use for service provider revenue is that tier-one service providers have to replace as much as half their present revenue about every decade. That is a simple reflection of the fact that every telecom product has, like every other product, a life cycle.

The maturation–and falling prices and revenues–of fixed line subscriptions, long distance voice, mobile phone service, text messaging, linear video, fixed line internet access and now mobile internet access service provide clear examples.

That, in turn, is why I consider the business model the single most important issue for any tier-one service provider.

Much of that upside–it is hoped and expected–will come from any number of new use cases, applications and revenue streams from the broad internet of things or pervasive computing ecosystems.

Gary Kim

Gary Kim is a communications industry analyst of 30 years, ranked second globally among power influencers in mobile and among the top 10 telecom thought leaders. He currently works as a telecom/Internet conference content developer and speaker. He recently founded the Spectrum Futures conference for the Pacific Telecommunications Council, and acts as a conference advisor for PTC. He is a member of Mensa, the international organization for people with IQs in the top 2 percent.